Fidelity quietly became one of the most active Wall Street firms in bitcoin — and now it's looking to recover after key departures from an internal crypto fund

Pedestrians stop and view the electronic display of the New York Street exchange activity in the window of Fidelity Investments at Park Avenue and 51st Street after the opening of the NYSE in New York, on Tuesday, Oct. 20, 1987. AP Images

Fidelity Investments launched an internal crypto fund last fall to invest the firm's balance sheet in digital assets, according to people familiar with the matter.

The fund, which is very small and exploratory, is waiting for a new fund manager after two employees involved in the project left.

Fidelity is also hiring employees to work on services relating to cryptocurrency exchanges and crypto custody.

An internal crypto fund at Fidelity Investments is looking for a new fund manager after key members of the team left the firm, according to people familiar with the matter.

The fund, which is small and exploratory, is inactive for now. It was launched in fall 2017 and used capital from the firm's balance sheet to invest in crypto-related assets, the people said. It actively invested in digital currencies and crypto companies before two senior members of the project exited Fidelity.

Matt Walsh left Fidelity to launch a crypto VC fund. LinkedIn Matt Walsh, a former vice president at Fidelity, and Nic Carter, a former investment research analyst at the firm, were both involved with the project and left recently to start Castle Island Ventures, a crypto-focused venture capital firm, the people said. Walsh and Carter could not be reached for comment. A spokeswoman for Fidelity declined to comment on the exits.

The project, which has not been previously reported on, shows the extent to which Fidelity — by wagering its own capital —is diving into the nascent market for digital currencies. The fund invests in both crypto-assets and crypto companies, according to a person familiar with the matter.

Other established Wall Street players are also weighing their own moves into crypto. Goldman Sachs has a team dedicated to building out a trading operation tied to crypto, and the New York Stock Exchange is reportedly building a crypto trading platform.

Yet other financial firms are remaining cautious. Regulatory and security risks are commonly cited as reasons bitcoin hasn't been adopted more broadly yet.

Aside from Walsh and Carter, Fidelity has lost a number of crypto employees in recent months.

Ben Pousty, formerly digital asset marketing lead for Fidelity Labs, left the firm in April to join crypto firm Circle, according to his LinkedIn profile. Kinjal Shah, formerly a senior consulting analyst, also left the firm to join Blockchain Capital, the crypto venture firm.

Notably, Thomas Pacchia, formerly a director at Fidelity's crypto incubator, left Fidelity in 2017 to start HODL Capital, a crypto fund based in New York.

To be sure, Fidelity has made hires too. It recently brought on Tom Jessop, the former president of Chain and an ex-Goldman Sachs executive, as a head of corporate business development, for example.

A previous version of this post imprecisely described the status of Fidelity's crypto fund. It does not have a fund manager, but it is not shut.